4. G.R. No. 123672: Fernando Carrascoso, Jr. v. Court of Appeals and Lauro Leviste December 14, 2005.

477 scra 666

Contract to Sell vs Contract of Sale

FACTS: In March 1972, El Dorado Plantation Inc, through board member Lauro Leviste, executed a Deed
of Sale with Carrascoso. The subject of the sale was a 1825 hectare of land. It was agreed that
Carrascoso is to pay P1.8M. P290K would be paid by Carrascoso to PNB to settle the mortgage placed on
the said land. P210k would be paid directly to Leviste. The balance of P1.3M plus 10% interest would be
paid over the next 3 years at P519k every 25 th of March. Leviste also assured that there were no
tenants hence the land does not fall under the Land Reform Code. Leviste allowed Carrascoso to
mortgage the land which the latter did. Carrascoso obtained a total of P1.07M as mortgage and he used
the same to pay the downpayment agreed upon in the contract. Carrascoso defaulted from his
obligation which was supposed to be settled on March 25, 1975. Leviste then sent him letters to make
good his end of the contract otherwise he will be litigated. In 1977, Carrascoso executed a Buy and Sell
Contract with PLDT. The subject of the sale was the same land sold to Carrascoso by Leviste but it was
only the 1000 sq m portion thereof. The land is to be sold at P3M. Part of the terms and conditions
agreed upon was that Carrascoso is to remove all tenants from the land within one year. He is also given
a 6 month extension in case he’ll need one. Thereafter, PLDT will notify Carrascoso if whether or not
PLDt will finalize the sale. PLDT gained possession of the land. El Dorado filed a civil case against
Carrascoso. PLDT intervened averring that it was a buyer in good faith. The RTC ruled in favor of
Carrascoso. CA reversed the RTC ruling.

ISSUE: What is the nature of each contract?

HELD: The contract executed between El Dorado and Carrascoso was a contract of sale. It was perfected
by their meeting of the minds and was consummated by the delivery of the property toCarrascoso.
However, El Dorado has the right to rescind the contract by reason of Carrascoso’s failure to perform his
obligation. A contract of sale is a reciprocal obligation. The seller obligates itself to transfer the owner
shipof and deliver a determinate thing, and the buyer obligates itself to pay therefor a price certain in
money or its equivalent.

The non-payment of the price by the buyer is a resolutory condition which extinguishes the transaction
that for a time existed, and discharges the obligations created there under. Such failure to pay the price
in the manner prescribed by the contract of sale entitles the unpaid seller to sue for collection or to
rescind the contract. The contract between Carrascoso and PLDT is a contract to sell. This is evidenced
by the terms and conditions that they have agreed upon that after fulfillment of Carrascoso’s obligation
PLDT has “to notify Carrascoso of its decision whether or not to finalize the sale.”Carrascoso also
averred that there was a breach on El Dorado’s part when it comes to warranty. Carrascoso claimed that
there were tenants on the land and he spent about P2.9Mrelocating them. The SC ruled that Carrascoso
merely had a bare claim without additional proof to support it.

Requisites of Express warranty in a Contract of Sale (1) the express warranty must be an affirmation of
fact or any promise by the seller relating tothe subject matter of the sale; (2) the natural tendency of
such affirmation or promise is to induce the buyer to purchase thething; and 3) the buyer purchases the
thing relying on such affirmation or promise thereon.